The National Government of Colombia has launched the third auction for non-conventional renewable energy projects, reinforcing its commitment to the country's energy transition. The auction process involves buyers and sellers submitting sealed bids for renewable energy supply and purchase. Winning projects will sign 15-year contracts to supply energy at hourly prices indexed to inflation. This auction aims to integrate over 2,500 MW of renewable energy capacity by 2022 and attract investment through Colombia's attractive regulatory framework that incentivizes renewable projects.

1. THE
Why invest in renewable energy
BACKGROUND
NATIONAL GOVERNMENT IS COMMITED
PROJECTS IN COLOMBIA?
How does
it work?
Which commercial
agents can
participate?
It is a two-sided sealed bid auction,
with voluntary participation for buyers
and sellers.
The goal is to maximize the consumer’s
benefit through better public electricity
service.
Buyers bid a maximum amount of
energy for one day in MWh-day and
commit to paying for the contracted
energy regardless of its consumption
level.
Sellers bid an equal amount of energy
in MWh for the time periods of each of
the three defined intraday blocks (Block
1: 0:00-7:00 hours; Block 2:
7:00-17:00 hours; Block 3:
17:00-24:00 hours) and are under the
obligation to supply the contracted
energy.
Which generation
projects can
participate?
What is the
product of the
auction?
The National Government provides the
Draft of the Contract to be signed by
the buyers and sellers as well as the
values related to payment and
performance guarantees.
Take or pay - contract with hourly price
equal to the sale price, with a 15 years
term.
Denomination in COP, indexed with
the Producer Price Index (PPI).
Energy supply obligations will start on
January 1, 2023.
The seller has the obligation to
constitute a collateral to guarantee
date of entry of operation, which can
be extended for up to two (2) years
after the beginning of the contract’s
supply obligations.
This auction is open to any commercial
agent from the wholesale energy
market, whether it serves the regulated
market, the unregulated market, or
both.
It is exclusive for Non-conventional
renewable energy generation
projects.**
The capacity of these projects must be
equal to or greater than 5 MW.
Projects between 5 MW and 20 MW
must adhere to centralized dispatch.
Non-Conventional Energy Sources
generation projects that have previous
obligations in other auctions can bid
only in intraday block 3.
Projects must be currently registered
before UPME in Phases 1 or 2.
Projects must have a favorable
connection concept from the Mining
and Energy Planning Unit - UPME.
The project’s operational start-up date
must be after the awarding auction
date.
to the energy transition:
A L L A B O U T
E N E R G Y A U C T I O N
THE THIRD RENEWABLE
2021
The National Government launched the
third auction for non-conventional
renewable energies, reinforcing its
commitment to Colombia's energy transition.
Colombia is a leader in the integration of
renewable sources in Latin America. It has increased its
installed capacity with renewable energies sources by nine times
in less than three years. By 2022, it is estimated that the country
will have more than 2,500 MW installed capacity for these
energy sources.
Renewable
energies sources
potential
NEW AUCTION
Draft of the contract:
published for comments between 26/04/2021
- 11/05/2021.- The final publication will
include the bidding documents and specific
conditions.
Publication of the final version of the
Bidding Documents and Specific
Conditions.
Awarding of the auction.
By means of Resolution MME 40141 of
May 7, 2021, the Ministry of Mines and
Energy introduced modifications to the auction
rules. The compiled version of the auction rules
can be found at:
Call for the auction:
officially published by Resolution MME 40179 of
June 9, 2021.
Auctioneer Designation:
the Ministry of Mines and Energy designates XM
(the system electric system operator or “ASIC” by
its Spanish acronym), as auctioneer through an
agreement signed by the parties on June 17,
2021.
May
October July
June
2021 AUCTION
click here
SCHEDULE
2021
We invite you to visit the website set by the Ministry of Mines and Energy
for the third renewable energy auction, whereby those interested can find related
information and the latest advances in the schedule.
Click here for further information:
The Steering committee of FENOGE (the
public Fund for Renewable Energies
and Energy Efficiency) approved the
resources to finance the implementation and
administration of the third Non-Conventional
Energy Sources auction.
Colombia is a privileged coun-
try with an enormous poten-
tial for the use of renewable
energy sources, such as solar,
wind and hydro, exceeding the world
average.
Incentives for investment
in renewable energies*
Colombia has an attractive regulatory and tax framework that promotes the
installation of these renewable energies projects:
Obligation to purchase 10% of the energy
commercialized from Non-Conventional Energy
Sources.
50% income tax deduction for 15 years for
investments in Non-Conventional Energy
Sources.
Possibility of applying for accelerated
depreciation (3 years) on the investments
made.
Acquisition of solar generation equipment is
automatically exempt from VAT and customs
rights.
In 2019, Colombia carried out its second renewable energy auction in which
9 generation projects, including wind and solar, were selected. As a result, more
than 1,300 MW of installed capacity were awarded, creating more than 6,000 jobs, and
attracting around USD $2 billion in investment. This auction closed at competitive prices for the
Colombian market, at approximately 28 USD/MWh.
* Excluding hydropower.
** Excluding large-scale hydropower projects